Wednesday, November 26, 2008

Obama picks Volcker to lead committee

Former Fed chairman Paul Volcker has been selected by President-elect Barack Obama to lead a new White House economic advisory committee.

New York Times has the details:

"Mr. Obama made the announcement at his third news conference in three days. The public appearances by the president-elect are intended to show Americans that his team is focusing on resolving the financial crisis, which Mr. Obama said Wednesday demands “fresh thinking and bold new ideas from the leading minds across America.”

Mr. Volcker, 81, has been providing Mr. Obama with advice on the economy for months. After briefly considering him for Treasury secretary, Mr. Obama instead asked Mr. Volcker to lead the President’s Economic Recovery Advisory Board, a new panel to be comprised of leading figurees als from a variety of business sectors. The group is supposed to advise Mr. Obama on how to jump-start the economy and stabilize the financial markets...

Mr. Volcker became chairman of the Federal Reserve in August 1979 as President Jimmy Carter was fighting to rein in the inflation caused by the oil shocks of 1973 and 1978. Mr. Volcker, who led the Fed until 1987, often used tactics that were unpopular, like rapid increases in interest rates. Criticized at the time for causing a recession, Mr. Volcker was later praised for the effectiveness of his efforts."

The appointment of Volcker to head this committe will be seen as a smart move on Obama's part, especially by those who favorably recall Volcker's efforts to wring excess inflation from the US economy in the early 1980s.

Some, like Marc Faber, might even say that Obama should go one step further and try to appoint Paul Volcker as the new Federal Reserve chairman!

Related articles and posts:

1. Discussion on the economic crisis with Paul Volcker - Charlie Rose.